The Yanks Are Coming Fortune (09/04/00) Vol. 142, No. 5 p.301; Tomlinson, Richard
The growing number of Europeans who invest online has
led to an explosion of European discount brokerages.
London-based J.P. Morgan predicts that the total number of
European traders who use discount brokers will increase from four
million to 18 million between 2000 and 2003. Over the next few
years there will likely be a consolidation of the European
discount brokerage business, with powerhouses such as Britain's
Barclays Stockholders and Germany's Comdirect possibly coming out
on top. But Schwab, eTrade, TD Waterhouse, and other American
discount-brokering giants are not sitting still. In London,
Waterhouse and Charles Schwab Europe claim to have more online
customers than native discount brokerage Barclays. The American
presence is significantly smaller on the continent, but U.S.
brokerages are not deterred. "Our aim is to take more than 10
percent of the market overall and become No. 1 or No. 2 in the
region," says eTrade's head of European operations Johann
Brenner. Many Europeans believe that the complexity of the
continental business ethic will stymie American brokerages, but
they ironically predicted the same fate for America Online's and
Yahoo!'s European ventures a year ago and were proved incorrect.
European cultural obstacles cut both ways. For example,
cross-border financial transactions that are obstacles for
American businesses are also obstacles for Europeans. U.S.
discount brokers also have the first-mover advantage while
continental brokers are still mostly confined to their national
markets. Merrill Lynch and HSBC plan to launch "the first global
online banking and investment service" later this year, each
company maintaining equal stake in that venture. And both Schwab
and eTrade have started to offer additional financial service
products to increase European holdings.